Acts 20 and 22—which incentivize the export of services and relocation of foreign investors to the island, respectively—are certainly at the forefront of these efforts. But in 2014, Act 185 also came into play, seeking to spur private equity funds on the island with significant tax benefits. The Private Equity Funds Act provides “the same benefits that millionaire investors get under Act 22,” Economic Development & Commerce Secretary Alberto Bacó Bagué recently told Caribbean Business.

“Anyone who has money to invest can benefit,” he stressed.

For their part, panelists noted how Act 185 has leveled the playing field for local investors and how returns could be maximized using the law, particularly when paired with Act 20. To date, five of these funds are operational, with others in the making.

Hernández and Vincenty explained some of the benefits and requirements of Acts 20 and 185, both of which are available to local residents. In short, Act 185 investors benefit from deductions for net capital losses and gain additional benefits with their investments in an eligible private equity fund.

“This is rocking,” Ferrer said in reference to the enormous potential of Puerto Rico’s tax incentives laws. He urged investors to make use of the tax incentives package and convert the island into a powerhouse in exporting services and using local resources.

He recently told Caribbean Business how Act 185 also gives Puerto Rico companies, with no access to public capital markets, the opportunity to obtain financing through these funds. “[Act 185] broadens the scope of investments that can be incentivized on the island to create additional economic activity and job creation,” Ferrer said.

‘THIS WORKS’

Critics of the tax incentives laws have questioned its job-creation ability on the island, particularly as there are no such requirements under the programs, with an average 11 full-time jobs created so far by each decree awarded. They have also argued there is preferential treatment to those from abroad over Puerto Rico residents.

The Economic Development & Commerce Department (DDEC by its Spanish acronym), led by Bacó, believes that with only three years in place, it could be too soon to truly gauge the tax incentives’ overall impact on Puerto Rico’s economy. A recent government commissioned study conducted by Estudios Técnicos found the program has good prospects when it comes to economic development—including job creation.

Ferrer talked about a familiar example of how the island’s tax incentives have already created economic development opportunities. He noted how these helped him and his partner, Caribbean Business Editor in Chief Heiko Faass, in acquiring the former Casiano Communications with private equity. The operation has been transformed into what is now Latin Media House (LMH), paving the way for the company to become an exporter of media, expanding its reach and targeting markets not only in Puerto Rico, but also in the U.S. and Latin America. Recently, LMH announced it is engaged in acquisition talks with NotiCel, a local digital-media company. The preliminary agreement would integrate NotiCel with LMH’s growing media portfolio.

“All this couldn’t have happened without Acts 20 and 185,” Ferrer stressed.

For Holder, the commonwealth’s tax incentive offerings have also proven positive. “This works,” he told attendees, while noting how he moved offices from Miami to the island and how the operation is expanding.